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Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Arkansas?

Date: 04/03/2017 |Category: Buyer Tips, Salvage Cars

A flooded car poses dangers to owners, and can be a money-losing investment to would-be dealers. Buying and selling a flooded car is not for the faint of heart, and requires skill and time. You can make money buying and selling flooded cars, but you should be prepared to fetch significantly less than the car’s market value. Here’s what you need to know about buying and selling flooded cars in Arkansas.

Arkansas Salvage Vehicle Rules

In Arkansas, a car that has been flooded must be declared a total loss by the insurance company. The reason for this is fairly simple: the cost to repair a flooded vehicle is immense. Though it’s possible to repair cosmetic damage such that the car looks relatively new, fixing underlying structural and engine problems is more difficult. Most flooded vehicles will need a full rebuild, and this is something few owners and even fewer insurance companies are willing to invest in.

It is this risk of flooded vehicles that makes them an unsound investment. Even a car that looks ok can have extensive damage. Without a vehicle history report and a mechanical history on the car, the car is simply not worth the risk.

Arkansas does, however, allow owners to buy flooded cars, fix them up, and then register the title. The state’s salvage title laws require owners to show the rebuild history and submit an affidavit attesting to the car’s condition. Owners can then register for a salvage title that evidences the vehicle’s repair history. This title may help the car sell for slightly more.

Getting a Clean Title

Some states allow owners to rebuild a car and seek a car indicating that the car has been repaired. Arkansas is not among these states. Once a car is registered with a salvage title, that label will follow the car. However, because Arkansas places strict regulations on whether and when a car can be registered with a salvage title, a salvage title actually adds some value to a flooded car, since it evidences that the car has been rebuilt.

If the car is old, there’s another option that offers a clean title: Arkansas allows owners to register flooded cars with a clean title if the car was at least seven years old at the time it was flooded. This should give prospective used car buyers pause, since it means that any used car for sale in Arkansas that is older than seven years could actually be a flooded car.

Rebuilding a Flooded Car

Unless the car was older than seven years old at the time it was flooded, you won’t be able to get a clean title. So if the car is already registered as a salvage title, it might not be worth your effort to attempt to further rebuild it—unless, of course, you have clear evidence that the rebuild will greatly enhance the value of the car. If that’s the case, the rebuild will be worth it, but don’t delude yourself into believing you’ll be able to re-register the car with a clean title. You can’t, and you won’t.

Title Washing: An Illegal Strategy

Some new owners, desperate to offload a flooded vehicle that has a rapidly diminishing value, attempt to register the car in a new state. This is often successful, since the vehicle history might not follow the car. This strategy, however, is an illegal and fraudulent one known as title washing. Title washing obscures the car’s history as a flooded vehicle, fraudulently inflating its value and potentially putting buyers in danger.

If you engage in title washing, you could go to jail. Worse still, you might be sued for any damages the new owner incurs. Those damages can be immense if a faulty engine or severely damaged frame leads to a major car accident. Title washing is not worth the few hundred or thousand extra dollars it can get you.

Tips for Buying and Selling Flooded Cars in Arkansas

Some people earn a tidy living buying and selling flooded cars in Arkansas. One of the best ways to ensure you get a fair return on your investment is to seek a dealer license so you can attend dealer auctions. These auctions tend to offer higher quality cars, and are less likely to welcome fraudulent dealers attempting to peddle damaged, dangerous cars.

Some other strategies that can help you break into the industry while maximizing your return on your flooded car investment include:

  • Carefully researching each and every vehicle you buy. Only purchase potentially high-value cars, such as those for which there is a high demand or collector’s and vintage items that are no longer available on the market. Low-value vehicles almost never offer a decent return on the investment, since buyers can easily purchase them used.
  • Get a complete vehicle history report on any salvage or flooded car you are contemplating buying. This tells you exactly what damage the car has sustained, and whether the car can be repaired.
  • Knowing exactly which repairs need to be made and how much they will cost ahead of time. Costly repairs can drive down your profits, and even turn your investment into a total loss.
  • Becoming involved in your local dealer and salvage communities, since these people are often the most knowledgeable and most helpful. They can also connect you to quality auctions and offer purchase and sales tips.

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